A new study published by the National Bureau of Economic Research (NBER), “The Costs and Net Returns to College Major,” finds that offering a philosophy major may be as good an investment of educational dollars as offering engineering and health majors.
The study, by Joseph G. Altonji and Seth D. Zimmerman, maps the average costs of educating students in particular majors against the earnings of students in those majors to determine the “net private returns” of different majors (explained below). The authors make use of data from Florida, and, unfortunately, as with many such studies, the data for philosophy majors is lumped in with the data for religious studies majors under the heading “Philosophy.” Many people seem to believe that the earnings of philosophy majors are higher than those or religious studies majors (though I am not aware of aggregate data showing this); if true, philosophy would do even better on this measure. (UPDATE: Thanks to commenter Matty for reminding me of the Payscale site which indeed lists philosophy majors as earning more than religious studies majors.)
The study was motivated by proposals floated by politicians to encourage students to “pursue degrees in perceived high-return areas such as the STEM fields while suggesting that students think carefully before pursuing degree programs in liberal arts with perceived low returns. The idea is that by choosing higher-earning degree programs, students will help raise the return on public and private investments in higher education.” The authors note that often overlooked in these discussions is that “the costs of producing graduates or credit hours varies substantially by field.” They add:
Some majors may lead to high earnings but be costly to produce, offering lower net returns per graduate or per invested dollar than lower-earning but less costly majors. An understanding of net private returns (private returns net of instructional costs) may be valuable for policymakers seeking to maximize the efficacy of higher education spending… We find that costs per credit and per graduate vary by field, and that measures of earnings returns net of cost are in many cases significantly different from returns measured using labor market outcomes only.
For example, while engineering majors earn more than computer science majors, since engineering majors cost more to educate than computer science majors, the “net return” on computer science majors is higher than that of engineers. In general, they find:
Health and Engineering majors, where earnings returns are large on a per graduate basis, have per-dollar returns similar to those observed in education, math, philosophy, and language degrees, where earnings are much lower. The degrees that fare best on a per-dollar basis are business and computer science, which are both high-earning and relatively cheap. These majors have per-dollar earnings returns that are 60% to 80% higher than in education degrees. The degrees that fare worst are Architecture, Art, and the Physical Sciences, which are fairly expensive and have relatively low earnings; these majors have per-dollar earnings returns that are 20% to 30% below that for education. (p.17)